Calling John Galt

Zero Sum Idiocy

One of the hurdles you have to clear when explaining how taxes and incentives work is getting them over the hump in understanding the fallacy of the Zero Sum.

Raising taxes on some people is not equivalent to lowering them for others.

The fact that someone made a billion dollars is not proof that money was taken from poor people.

The Zero Sum mindset is too simple, which is why it’s so hard to beat when the medium of discourse is a bumper sticker.

But there’s another example of Zero Sum assumptions that also poisons real thought, and it has to do with Power.

Die-hard liberals will tell you a strong government is a necessity, to protect people from Evil Corporations. Think about the premises they expose in that line of logic, though.

They assume there is a single, stable amount of power and influence available at all times. When one person has it, another doesn’t. And to some extent, this is certainly more true of power than it is of raw dollars and purchasing power. You can make analogies about “rising tides lifting boats” when you’re talking about prosperity, but power is a different story. Isn’t it?

It’s easy to assume that when one entity steps away from Power, there will be a vacuum that is filled by something else. If the King abdicates his crown, he either names a successor or there is a fight to fill the throne. But pitting Big Business and Government on opposite sides of the boxing ring is naive. It’s more like a tag-team wresting match, where Uncle Sam and Robber Baron have been working in tandem for years, and you and I have been Camel Clutched and Drop-kicked (if we haven’t nodded off to the Sleeper hold yet.)

Government and Business don’t fight with each other. They cooperate – and when one gets stronger, it adds to the power of the other. When it happens at a very high and tight level, you end up with a form of corporate fascism. That’s not Zero Sum, that’s a multiplier effect.

The way you beat this team is through splitting them up, so they can’t tag out anymore. And that’s been the strategy of the American Progressive movement for a very long time. It’s easy to understand the motive. “I do have the power to vote for politicians, but I don’t get to vote for CEOs.” So they choose Government.

The reality is that you only get a “vote” every 2, 4 or 6 years. And that vote may have so many variables attached, that the person you elected gets a mixed signal – or even worse, assumes a mandate for an agenda that doesn’t really exist.

But how many times did you buy something today? You made a choice about not just what to purchase and where to purchase it, but whether to make a purchase at all. Corporations (at least ones that operate in a market) are far more sensitive to needs and demands. You “control” them far more than you do a government.

The other reality-check is that you can’t get rid of lobbying influences as long as there is a strong central government. The need to lobby exists wherever there is outsized power to be wielded.

Want to get rid of Corporate Big Greedy Influence in our lives? Vote for candidates who actively seek to limit the power and scope of government. Don’t set out giant honey pots, then complain when the ants show up demanding more than their share.

Power is not a Zero-Sum game between government and enterprise. You can limit the power of both, and return more freedom (and responsibility) to the individual in the bargain.

Do Over

This political cartoon is making the rounds in the hours before the State of the Union:

While I’m sure many agree with the sentiment intended by the cartoonist, this would be a huge mistake.

The English-speaking world reads from left to right.

So looking at the teleprompter glass from the President’s perspective, we’d see a constant reminder to

Over Do.
Over Do.
Over Do.

The failures of this administration lie chiefly in the reality it is trying to do far more than is Constitutional, and far more than the aggregate electorate is comfortable with. We don’t want a government to Over Do anything. If anything, do less.

Moral Hazards

Much of the furor over the housing/lending/banking/bailout “crises” was a lack of general understanding about what was to blame. Politicians seized the moment of confusion, and set about their predictable path of demagoguery and power acquisition, “for our own good.”

I’m glad to see others (like the Center for Freedom and Prosperity Foundation) are using simple language to explain what used to be common sense.

Business Keeps A Voice

The editorial board at the New York Times is none too happy about the ruling in Citizens United v Federal Election Commission:

The majority is deeply wrong on the law. Most wrongheaded of all is its insistence that corporations are just like people and entitled to the same First Amendment rights. It is an odd claim since companies are creations of the state that exist to make money. They are given special privileges, including different tax rates, to do just that. It was a fundamental misreading of the Constitution to say that these artificial legal constructs have the same right to spend money on politics as ordinary Americans have to speak out in support of a candidate.

The majority also makes the nonsensical claim that, unlike campaign contributions, which are still prohibited, independent expenditures by corporations “do not give rise to corruption or the appearance of corruption.” If Wall Street bankers told members of Congress that they would spend millions of dollars to defeat anyone who opposed their bailout, and then did so, it would certainly look corrupt.

I like that line about Wall Street bankers. I also applies to Move On, and to SEIU.

The fact is that campaign contributions are open and available for all to see. If a company moves in with an onerous amount of cash, that actually has a negative effect. Instead of moving money through PACs, and hiding influence through individual donations, all the giving can be out front for anyone to see.

The final nail, though, is the Times’ supposition that money translates instantly into votes. Martha Coakley raised four dollars for every one garnered by Scott Brown, and outspent him by a factor of five.

Up and at ‘em! Big Brother needs you to work!

George Will refuses to let go of the argument that health-care reform legislation needs to overcome a serious hurdle: the Constitution.

Supporters of the mandate say Congress can impose the legislation under the enumerated power to regulate interstate commerce. Since the New Deal, courts have made this power capacious enough to include regulating intrastate activity that “substantially affects” interstate commerce. Hence Congress could constitutionally ban racial discrimination in “public accommodations” — restaurants, motels, etc. — as an impediment to interstate commercial activity.

Opponents of the mandate say: Unless the commerce clause is infinitely elastic — in which case, Congress can do anything — it does not authorize Congress to forbid the inactivity of not making a commercial transaction, of not purchasing a product (health insurance) from a private provider.

“Congress can regulate commercial activities in which people choose to engage, but cannot require that they engage in those commercial activities.” So says Sen. Orrin Hatch, who also notes that if Congress can mandate particular purchases to help the economy, there was no need forCash for Clunkers: Congress could have ordered people to buy cars (with subsidies, if necessary). Why not the Anti-Couch Potato Act to Make Calisthenics Mandatory and to Impose a $50 Excise Tax on Cheeseburgers Because Unhealthy Lifestyles Affect Interstate Commerce?

Will didn’t take it this far, but if you grant Congress that power, here is the logical progression:

IF it is legal for Congress to ban specific forms of inactivity because there would be an economic consequence, THEN it would be legal for the government to force you to work, even at a job not of your choosing. Oh, did you retire? Too bad! Get your ass to the office, pronto!

(Which is a good thing, because once people start dropping out of medical professions, they’ll need a way to conscript doctors, nurses and therapists.)

By What Authority

So, what exactly is the Constitutional authority being cited in the Health Care bill?

The “Interstate Commerce” clause?

Is that the same Interstate Commerce clause that was used in Wickard v Filburn?

The one that said it was illegal for a farmer to grow wheat to feed his own chickens, because it affected the price of wheat, which is traded across state lines?

Welcome to the return of the Company Store. Uncle Sam’s General Store, where it’s now illegal to not buy things!

Forget about Bastiat’s “Broken Window.” Do you really want to live in a country where the State can order you to buy windows, on the grounds that windows are sold across state lines and therefore under the jurisdiction of bureaucrats?!?

(oh, and we’re going to have to tax you on those windows you just bought…)

The Flaw of Capitalism

In a somewhat lengthy but accessible polemic at Forbes, tech strategist Sramana Mitra attempts to make the case that Capitalism is flawed:

The banks, however, are another matter altogether, and this is where I think capitalism has hit a roadblock. The government has intervened to save many of them, and now, these bailed out banks want to hand out billions in bonuses to their non-performing employees. Capitalism gave way to welfare economics, and now the government has to intervene further to limit these looters from behaving badly by imposing taxes and regulations. A whole messy cycle that brings me to the core “bug” in the system that Rand once sold me on, fully and completely.

Too many sacred tenets in Rand’s philosophy stand violated. Integrity, justice, fairness, work-ethic, excellence–all have fallen prey to greed. Rand’s flaw? She assumed integrity is implicit in the characters of the “leaders.” It isn’t. And hence again, most intelligent people are coming to the conclusion that the government must intervene to stop further shameless looting of taxpayer money. Free-market capitalism gets halted, regulation makes sense.

First of all, “free-markets” do not imply there is a lack of fraud regulation. Free individuals can communicate and collectively punish offenders more ruthlessly than a government can. The State remains necessary for the enforcement of contracts between free agents.

The other notion I find fascinating is that we somehow Free Markets invested too much stock in “integrity.” The reality is that the more we rely on The State to regulate, the more we invest in the “integrity” of politicians who are increasingly less accountable.

The dangerous notion, however, is that markets can be destroyed. You can’t destroy a market, you merely shift it. Decisions that are removed from what we consider a traditional free-market and placed in the hands of The State still occur. But all you’ve done is created a Market of Influence, and in the process removed the majority of people from having a say.

The more authority you remove from capital and consumer markets and invest in government, the more powerful the engine for graft and fraud. Concentrated power is far easier to co-opt, purchase and subvert.

“Markets” are not a theory, they are a fact. There will always be markets determining what resources are available and how they are allocated. The difference comes with how much freedom you have as an individual, and how much of a say you have in the outcomes. Doubling-down on a State-run market isn’t an act of “avoiding the flaws of Capitalism,” it’s just a riskier way of abdicating responsibility, and pushing all your chips into the middle for the most powerful to play with.

Maybe Mitra is right, and Capitalism is flawed. But it’s better than the alternatives, and handing control to The State only shifts the activity to the highest of high-rollers.

Methapplication of the Law

Indiana grandmother busted under anti-meth law:

Sally Harpold is a grandmother of triplets who bought one box of Zyrtec-D cold medicine for her husband at a Rockville pharmacy. Less than seven days later, she bought a box of Mucinex-D cold medicine for her adult daughter at a Clinton pharmacy, thereby purchasing 3.6 grams total of pseudoephedrine in a week’s time.

Those two purchases put her in violation of Indiana law 35-48-4-14.7, which restricts the sale of ephedrine and pseudoephedrine, or PSE, products to no more than 3.0 grams within any seven-day period.

By law, Harpold could get up to 60 days in jail and up to a $500 fine. As written, the law makes no distinction about why you bought the medicine or your intent.

Just as with any law, the public has the responsibility to know what is legal and what is not, and ignorance of the law is no excuse, the prosecutor said.

“I’m simply enforcing the law as it was written,” (prosecutor Nina) Alexander said.

Well, at least when the government is in charge of all health care, she won’t have a choice of family member for whom to purchase medicine.

Regulators Gone Amok

One of the key reasons I prefer my government small comes down to a simple axiom:

The smaller and less-powerful a government is, the less likely it is to become a target for lobbying and influence-peddling.

Businesses and industries often use the power of the state to enforce limits on competition. Often these limiting factors come in the form of regulation or unnecessary licensing. And because the real intent of these regulations is protectionist in nature, it is easy to ignore thoughts of the unintended consequences.

Such as the case of a Michigan woman, who is openly flouting the law by watching the neighbor kids at the bus stop:

photo: Grand Rapids Press

Lisa Snyder of Middleville says her neighborhood school bus stop is right in front of her home. It arrives after her neighbors need to be at work, so she watches three of their children for 15-40 minutes until the bus comes.

The Department of Human Services received a complaint that Snyder was operating an illegal child care home. DHS contacted Snyder and told her to get licensed, stop watching her neighbors’ kids, or face the consequences.

One lawmaker is already trying to craft an exception, which comes a little late for Snyder, who claims she’s been ordered to pay a $1,000 fine and faces up to 90 days in jail. Nice move, but somewhat too-little-too-late.

Oh… and how exactly did these intrepid investigators strike fear into the heart of Snyder, the “illegal daycare kingpin?”

A neighbor filed a complaint.

Think about that for a moment. A law-abiding citizen turned in a neighbor over something that was technically illegal, but shouldn’t have been.

So how hard was it supposed to be for people to turn in “suspect” information about health-care proposals to whitehouse.gov? (where opinions could get you on a list sanctioned by the executive branch.)

I feel a chill.

Thumbs down to a handout

Will the last free-market enthusiast in the media turn off the light on the way out?

Wait!  Not so fast!  There is hope!

From Slate:

When President Barack Obama told the Toledo Blade last week that he hoped that the faltering newspaper industry would recover because “fact-based” and “investigative reporting” are “absolutely critical to the health of our democracy,” even some of the cynical bastards who staff the nation’s dailies swooned.

Of course, the president didn’t pay anything more than lip service to the newspapers. He remained, in the Blade’s words, “noncommittal” about the bills, including one by Sen. Benjamin L. Cardin, D-Md., introduced early this year that would allow newspapers to reorganize themselves as nonprofits. “I haven’t seen detailed proposals yet, but I’ll be happy to look at them,” Obama said.

The good news is there are journalists, like Jack Shafer (author of the Slate piece), who see this as a threat:

Here’s hoping that the White House’s detailed-proposals czar keeps the Cardin bill out of Obama’s hands. The last thing newspapers need is the sort of help from the government that turns them into NPR, endlessly begging for contributions, pursuing wealthy philanthropists, and standing in line for government handouts.

Shafer also quotes from Donald Kimelman from the Boston Globe:

Why should the tax laws give an advantage to newspapers over other kinds of media? How will the recipients of philanthropic dollars avoid having their news agendas distorted by donor preferences? Would the crutch of donor support hinder the search for new commercial revenue necessary for news organizations’ long-term viability?

Of particular interest is the recognition that the newspaper industry has already suffered from the Unintended Consequences of other interventions.

I haven’t done this piece justice… so please click through and read it for yourself.

Here’s to the hope that journalists can turn use these same notions to be just as critical of other bailout and spending plans, that have their own Unintended Consequences.